"If you want to use the more efficient option, then the ESM would be the preference," the official reportedly said during a press conference.

Using money from one bailout fund or another may seem like a minor detail. But investors in the bond market see it as a potential deal breaker.

That's because the ESM would be a senior creditor, while private sector bondholders would come second in any bailout of the Spanish government. In other words, investors might not get all of their money back.

"It's never a good sign when investors want to scour contracts for legal considerations in judging payback potential," said Ciaran Ohagan, an interest rate strategist at Societe General, in a note to clients.